~ 我看青山多妩媚，料青山见我应如是 The mountain looks so beautiful in my eyes, that it reminds me of myself

Wheat price raises fear of food crisis

It is not a repetition of the 2007-08 food crisis yet, but the current wheat rally – the fastest in almost 40 years – could soon transform into a full-blown price spiral, spilling over on to other crops such as corn and pushing up retail prices worldwide.

The 2007-08 crisis, the first in three decades, saw the cost of agricultural commodities surge to record highs and riots in countries from Haiti to Bangladesh. It pushed wheat prices to an all-time high of more than $13 a bushel in the US. Yesterday, wheat in Chicago traded at nearly $8 a bushel, after rallying by 80 per cent since mid-June.

Yet the world is currently in a better starting position. Farmers have stockpiled large amounts of grain in their barns after two years of bumper crops. In 2007-08, grain stocks had been depleted after a string of bad crops in countries from Canada to Australia.

For example, US farmers, which traditionally are the world’s exporters of last resort on the grain market, are now sitting on almost 30m tonnes of wheat, up from just 8m in 2007-08. Inventories of rice, corn and other commodities are also at healthy levels.

“Wheat stocks are higher than they were during the wheat price spikes in 2008,” says Cargill, the world’s largest agricultural commodities trader, in an attempt to calm the rally. “The US wheat crop has been strong.”

Two other factors mediate against a crisis: oil prices are lower than in 2007-08 – when the benchmark West Texas Intermediate soared to almost $150 a barrel – so demand for biofuels will be lower. Ethanol and other biofuels consume large amounts of agricultural commodities such as corn and rapeseed. Also, lower energy prices mean cheaper fertilizer costs, so farmers could more easily expand their production.

The global economic crisis, ironically, plays against a food crisis as it reduces global demand for food commodities, particularly feeding grains used to fatten livestock.

具讽刺意味的是，全球经济危机反而抑制了粮食危机的发生，因为对大宗农产品的需求因之减少了，尤其是用于养肥牲畜的饲料谷物。

Jacques Diouf, director-general of the UN’s Food and Agriculture Organisation, says the sum of all those factors should prevent a crisis. He noted that global grain stocks were at about 528m tonnes, up from a 30-year low in 2007-08 of 427 tonnes.

But he also warned in an interview that panic buying and export bans could fuel prices, trigger speculation and lead the world into a crisis similar to that of 2007-08. “I don’t think we are heading to a new food crisis, but certainly there is a risk,” Mr Diouf added.